New Construction Closings Are Not Like Resales

If your buyer is purchasing a newly built home in a master-planned community like Lakewood Ranch, Parrish, Venice, or North Port, the closing process works differently from a resale transaction. Builder contracts, CDD assessments, Certificate of Occupancy requirements, and punch list walkthroughs all add complexity. REALTORS® who understand these differences set proper expectations and protect their clients.

Builder Contracts vs. FAR/BAR Contracts

Most builders use their own purchase contracts, not the standard FAR/BAR form. Key differences:

  • Non-negotiable terms: Builder contracts are typically presented as "take it or leave it" with limited room for modification
  • Deposit structure: May require larger deposits at multiple stages (contract, slab, frame, drywall)
  • Closing date flexibility: The builder controls the timeline. Closing is tied to the Certificate of Occupancy (CO), not a fixed date.
  • Inspection contingencies: Many builder contracts limit or exclude traditional home inspection contingencies, relying instead on the punch list walkthrough
  • Financing contingency: Some builder contracts have shorter financing contingency windows or require pre-approval from the builder's preferred lender
  • Escalation clauses: In rising markets, some builder contracts include price escalation provisions tied to material costs

REALTORS® tip: Always recommend that your buyer have the builder contract reviewed by an attorney before signing.

Understanding CDD Assessments

Many new communities in Southwest Florida are built within Community Development Districts (CDDs). CDDs finance infrastructure through special assessments that appear on the property tax bill. Your buyer needs to understand:

  • CDD assessments are in addition to regular property taxes
  • Annual assessments typically range from $1,000 to $5,000+
  • The assessment may include a bond component (which pays down over 20-30 years) and a maintenance component (ongoing)
  • CDD assessments cannot be negotiated with the builder
  • Lenders include CDD assessments in the buyer's debt-to-income ratio

Certificate of Occupancy (CO)

No closing can occur until the local building department issues a Certificate of Occupancy confirming the home meets all building codes. Delays in CO issuance are one of the most common causes of new construction closing delays. Reasons for delay include:

  • Failed building inspections
  • Utility connection delays
  • Missing or incomplete permits
  • Landscaping or site work not completed

The Punch List Walkthrough

Before closing, the buyer and builder conduct a walkthrough to identify:

  • Cosmetic defects (paint, drywall, flooring)
  • Incomplete installations (fixtures, appliances, hardware)
  • Items that do not match contract specifications
  • Grading, drainage, or landscaping issues

The builder should complete all punch list items before closing. If items cannot be completed in time, an escrow holdback can be negotiated to ensure completion.

Title Insurance on New Construction

New construction buyers absolutely need title insurance. Common title issues include:

  • Construction liens: Subcontractors or suppliers who were not fully paid by the builder can file liens against the property
  • Developer chain of title: The property may have passed through multiple entities before reaching the buyer
  • Easements and restrictions: Plat restrictions, utility easements, and CDD encumbrances must be identified
  • Survey issues: New surveys may reveal encroachments or setback violations

Builder Warranties

Most builders provide warranties covering:

  • 1 year: Workmanship and materials
  • 2 years: Mechanical systems (plumbing, electrical, HVAC)
  • 10 years: Structural defects

Ensure your buyer receives all warranty documentation at closing and understands the claims process.

Frequently Asked Questions

How is new construction closing different?

Builder contracts, CDD assessments, CO requirements, punch list walkthroughs, and builder-controlled timelines distinguish new construction from resale.

What is a CDD?

A special taxing district that finances community infrastructure. Adds $1,000-$5,000+ annually to the property tax bill.

Does my buyer need title insurance on new construction?

Yes. Construction liens, developer title chains, easements, and survey issues all create risks that title insurance protects against.

What is a punch list walkthrough?

A pre-closing inspection to identify defects and incomplete work. Builder should complete all items before closing.

Closing on new construction? Contact Barnes Walker for expert title services.

Disclaimer: This guide is for educational purposes. Builder contracts and CDD requirements vary by community. Consult an attorney for contract-specific advice.